Q3 Stock Picking Contest Update: We’re All Terrible

Welcome back to one of the periodic stock picking contest updates. If you’re new here, read the next paragraph to get a handle on the rules. If not, thanks for reading mom! (Go to hell dad, who never reads BECAUSE HE DOESN’T LOVE ME.)

The rules of the stock picking contest are simple. Each year, some of your favorite personal finance/investing blogs (and Financial Uproar!) choose four different stocks that each of us think will be the best performers over the year. The total return is just an average of how the four stocks did, including any dividends. We don’t track any currency conversions. Since this is a Canadian blog (go Blue Jays!), the default exchange for any dual-listed stocks is Canada, and the default currency is Canadian. If a stock gets taken over during the year, the participant is locked into that return.

When we last visited the stock picking contest, Don’t Quit Your Day Job was giving the rest of the entrants an ass kicking not seen since the last time Rihanna and Chris Brown were on a date. HEYO! He was up nearly 35% while blog readers Ben and Jeff rounded out the top 3 with a 15% and 10.4% return, respectively.

Let’s take a quick look back at the results as of the end of the second quarter.

Rank

Contestant

Results

1.

Don’t Quit Your Day Job

34.9%

2.

Blog reader Ben

15.0%

3.

Blog reader Jeff

10.4%

4.

101 Centavos

7.5%

5.

Vanessa’s Money

4.3%

6.

My Pennies My Thoughts

-1.7%

7.

Holy Potato

-2.5%

8.

Boomer and Echo

-2.6%

9.

Mochi and Macrons

-3.0%

10.

Blog reader Doug

-3.5%

11.

Money Propeller

-5.33%

12.

Financial Uproar

-5.34%

13.

Avrex Money

-6.6%

14.

My Own Advisor

-7.3%

15.

Freedom 35 Blog

-14.0%

At the time, the S&P 500 was up 0.5% if you reinvested the dividends, while the TSX Composite was down nearly 1%. Which means that a whole five out of 15 contestants beat the indexes. That’s not great, but keep in mind that a) if all the picks were one giant portfolio it would have beat the market, and b) contestants are encouraged to swing for the fences.

ENOUGH PREAMBLE. Let’s take a look at the results through October 5th. Spoiler alert: they’re not pretty.

Rank

Contestant

Results

1.

Don’t Quit Your Day Job

16.8%

2.

Blog reader Jeff

8.8%

3.

101 Centavos

5.8%

4.

Vanessa’s Money

0.1%

5.

My Pennies My Thoughts

-1.48%

6.

Blog reader Ben

-1.52%

7.

Avrex Money

-13.7%

8.

Boomer and Echo

-14.7%

9.

Mochi and Macrons

-15.4%

10.

Freedom 35 Blog

-27.0%

11.

My Own Advisor

-28.5%

12.

Money Propeller

-30.3%

13.

Holy Potato

-32.4%

14.

Blog reader Doug

-32.5%

15.

Financial Uproar

-34.9%

NICE WORK, FINANCIAL UPROAR. MORE LIKE (fart noise) YOU SUCKROAR.

Like last time, allow me to make fun of the stock picking contest entrants by making random observations.

The worst performing stocks of the whole contest were as follows: Winnipeg Free Press (down 79.6%), Baytex Energy (down 71%), Lightstream Resources (down 63%), Pengrowth (down 61.8%), and Penn West (down 56%). I picked two, Penn West and Winnipeg Free Press. Those were not good picks.

The best stocks picked were Sturm, Rutgers, and Company (up 69.8%), Credit Acceptance Corp (up 58.0%), Dollarama (up 55.3%), Element Financial (up 32.8%), and Valero (up 32.8%). Don’t Quit Your Day Job chose two of the top five performers, including Valero and Credit Acceptance Corp.

Everybody who lost more than 30% had at least one energy pick. Most had more than one.

Financial Uproar, My Own Advisor, Freedom 35 Blog, and Money Propeller, saw all four of their picks go down. It’s like that one year Timeless Finance (RIP) tried to finish last.

Vanessa’s Money was the only competitor to not suffer a double-digit loss. She didn’t get a double-digit gain either. She has a history of shooting for mediocrity though, so we’ll forgive her on this one.

If the results would have only been through October 1st, results would have actually been worse, since many oil stocks have had a terrific few days.

How’d we do compared to the indexes?

Because hey, if we suck, maybe we can suck slightly less than the indexes.

Or not. Through October 5th, the S&P 500 was down 2.66% if you reinvested the dividends. That would put it in 7th. The TSX Composite (via ETF XIC.TO) fell 7.1%, which would also put it in 7th. At first glance, not bad.

But if we take all the picks and put them in one giant portfolio, collectively we’d all be down 13.4%. That’s not good, no matter how you slice it.

The big reason why is energy. Out of a total of 60 picks, 20 are directly exposed to energy, with two more (two Russian ETFs picked by Vanessa) having strong ties to the sector. We collectively went very long energy, which did not work out.

Is this evidence that you shouldn’t listen to a word any of the stock picking blogs say? Hey, it could be. But it could also be random, or energy could have a big recovery in the fourth quarter and really help us out.

10 Comments

Haha. 1/3rd of our picks are in energy. How Canadian of us. I don’t think anyone could have predicted $40/barrel oil by September at the beginning of the year. 😛 At least we still have one more quarter. There’s still a chance. 🙂

1) This contest is an actual reflection of our portfolio — my money hovers around “growing with interest” and Nelson’s falls 30%
2) a) I’m beating you!
b) I beat you in 2013!
c) I almost beat you in 2014!

Might be neat to see what happens if you made those same picks for everybody now, where the results would be in a year. Obviously buying when prices are down by 1/3 or more could make a huge difference if the companies in question start to make money again. Of course if they go belly up, then they were obviously not the best picks to begin with. Kind of an interesting take on Buffett’s buy good companies when they are on sale philosophy?